2. Capacity Allocation
Assumptions
Motorcycle vs Scooter
Tyres • Maximize the contribution from both OEMs and
Replacement market by varying the number of
motorcycle and scooter tyres manufactured.
• Contribution from motorcycle tyres will be less
than or equal to the current 70% industry
average since growth in sales of scooter tyres
will be higher than that of motorcycle tyres.
• Total number of tyres produced will be between
500,000 and 550,000.
• Sales contribution of Motorcycle tyres in OEM will
be between current value i.e. 22% and industry
average i.e. 50%.
• Sales contribution of Scooter tyres in OEM will be
between current value i.e. 25% and industry
average i.e. 50%.
3. Results • Motorcycles
• OEM – 358,663 tyres/month
• Replacement – 63,581 tyres/month
• Total – 422,244 tyres/month i.e.
84.45% of production capacity
• Scooters
• OEM – 16,336 tyres/month
• Replacement – 61,419 tyres/month
• Total – 77,755 tyres/month i.e. 15.55%
of production capacity
Production per month
16336
61419
63581
358663
Motorcyles-OEM Motorcycles-Replacement Scooters-OEM Scooters-Replacement
8. 2 wheeler industry (C) Mopeds
Motorcycle • Market Share = 5%
78%
• TVS Motors enjoys monopoly in this segment with 100%
market share
Scooter
17%
• Other moped makers like Kinetic Motors, Majestic Motors
Moped
5% and Kinetic Engineering discontinued their business
operations few years back
• Generally preferred in rural and semi urban areas, hence
100%
TVS possibility of growth with rising disposable incomes of the
rural population
Clearly TVS enjoys the No. 1 position in this segment but due to very low market share in the
2 wheeler industry, it’s not much significant
9. In the motorcycle segment HHML should be the
priority OEM of CEAT with more focus on the
executive segment since major growth is going to
happen in that segment.
In the scooter segment, the priority OEM should be
undoubtedly HMSI followed by TVS since its
popularity among the people is on a growing path.
Since moped segment is totally captured by one
company it will be easy for CEAT to capture most
of this share if they provide better terms of trade to
TVS than its competitors.